Chapter 23: 11SE (page 1308)

Understanding variance relationships
Complete the table below for the missing variances.
Total Flexible Budget Product Cost Variance
(a)
Total direct material variance
(b)
Total direct labor variance
(c)
Total Manufacturing Overhead Variance
(d)
Direct material cost variance
Direct material efficiency variance
Direct Labor Cost Variance
Direct Labor Efficiency Variance
Total Variable Overhead Variance
Total fixed overhead variance
$310F
$165U
$160U
$415F
(e)
(f)
Variable Overhead Cost Variance
Variable Overhead Efficiency Variance
Fixed Overhead Cost Variance
$525U
$575F
$50F

Short Answer

Expert verified

Total Flexible Budget Product Cost Variance

$500(F)

Total direct material variance

(b)

Total direct labor variance

(c)

Total Manufacturing Overhead Variance

(d)

$145 (F)

$255 (F)

$100(F)

Direct material cost variance	Direct material efficiency variance	Direct Labor Cost Variance	Direct Labor Efficiency Variance	Total Variable Overhead Variance	Total fixed overhead variance
$310F	$165U	$160U	$415F	$50 (F)	$50 (F)

				Variable Overhead Cost Variance	Variable Overhead Efficiency Variance	Fixed Overhead Cost Variance
				$525U	$575F	$50F

Step by step solution

Definition of Variance Analysis

The analysis used to determine the difference between the actual activity level and the standard activity level is known as variance analysis. It is carried out to control the business process.

Calculation of missing amounts

Total product cost flexible budget variance:

Particular	Amount $
Total direct material variance	$145 (F)
Total direct labor variance	$255 (F)
Total manufacturing overhead variance	$100(F)
Total product cost flexible budget variance	$500 (F)

Total direct material variance:

Particular	Amount $
Direct material cost variance	$310 (F)
Direct material efficiency variance	$165 (U)
Total direct material variance	$145 (F)

Total direct labor variance:

Particular	Amount $
Direct labor cost variance	$160 (U)
Direct labor efficiency variance	$415 (F)
Total direct labor variance	$255 (F)

Total manufacturing overhead variance:

Particular	Amount $
Total variable overhead variance	$50 (F)
Total fixed overhead variance	$50 (F)
Total manufacturing overhead variance	$100 (F)

Total variable overhead variance:

Particular	Amount $
Variable overhead cost variance	$525 (U)
Add: Variable overhead efficiency variance	$575 (F)
Total variable overhead variance	$50 (F)

Total fixed overhead variance: This variance will equal the fixed overhead cost variance. Therefore, it is $50 (F).

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Static budget variable overhead	\(7,800
Static budget fixed overhead	\)3,900
Static budget direct labor hours	1,300 hours
Static budget number of units	5,200 units

Short Answer

Step by step solution

Definition of Variance Analysis

Calculation of missing amounts

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